Correlation Between Ningbo Ligong and Sanbo Hospital

Can any of the company-specific risk be diversified away by investing in both Ningbo Ligong and Sanbo Hospital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ningbo Ligong and Sanbo Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ningbo Ligong Online and Sanbo Hospital Management, you can compare the effects of market volatilities on Ningbo Ligong and Sanbo Hospital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ningbo Ligong with a short position of Sanbo Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Ligong and Sanbo Hospital.

Diversification Opportunities for Ningbo Ligong and Sanbo Hospital

0.32

Correlation Coefficient

Ningbo Ligong  Sanbo Hospital

Weak diversification

The 3 months correlation between Ningbo and Sanbo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Ligong Online and Sanbo Hospital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanbo Hospital Management and Ningbo Ligong is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ningbo Ligong Online are associated (or correlated) with Sanbo Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanbo Hospital Management has no effect on the direction of Ningbo Ligong i.e., Ningbo Ligong and Sanbo Hospital go up and down completely randomly.

Pair Corralation between Ningbo Ligong and Sanbo Hospital

Assuming the 90 days trading horizon Ningbo Ligong Online is expected to generate 1.13 times more return on investment than Sanbo Hospital. However, Ningbo Ligong is 1.13 times more volatile than Sanbo Hospital Management. It trades about -0.05 of its potential returns per unit of risk. Sanbo Hospital Management is currently generating about -0.14 per unit of risk. If you would invest  1,302  in Ningbo Ligong Online on October 22, 2024 and sell it today you would lose (43.00) from holding Ningbo Ligong Online or give up 3.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ningbo Ligong Online  vs.  Sanbo Hospital Management

Ningbo Ligong Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningbo Ligong Online has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sanbo Hospital Management

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sanbo Hospital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sanbo Hospital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ningbo Ligong and Sanbo Hospital

The main advantage of trading using opposite Ningbo Ligong and Sanbo Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Ligong position performs unexpectedly, Sanbo Hospital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sanbo Hospital will offset losses from the drop in Sanbo Hospital's long position.

The idea behind Ningbo Ligong Online and Sanbo Hospital Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.